Basic Economy Explanation

[tomosuke]

Basic Economy Explanation:

It all revolves around supply and demand.

Supply is the people who have the particular item.

Demand is the people who want to have that particular item and are willing to buy it.


So then, how come small servers are considered to have a bad economy?¹ Also, why are donation servers also more prone to having a bad economy as well?²

1) So why is it that small servers have a bad economy. It's simple, the lack of people makes high prices. In large servers, there are many people hunting for a certain item. This makes it easier to get the item that you're looking for. But in small servers, they hunt almost always for themselves, when they get something they want to sell, they sell it high, since they consider it rare. So yes, the economy is actually a major factor in having a good economy.

I'm not saying that things will be like this forever, the longer the server goes on, then it eventually will get filled with cards, and soon you'll be able to acquire cards cheaper. This transition phase to bad to good is easier attained with a bigger population.


2) Now onto donation servers. There are three types of donations. Limited donations, the best style, which limits the amount of items over a period of time to prevent a sudden income of people selling donation items. Limited donations, coupled with it being bound makes it worth it, since it will not cause any problems to the economy. However, balance issues can still come out.

The second type is the consumable donation type. This is usually what wrecks the economy if done badly. Chance items are a good donation items, since propencity is still there, meaning it's like a lottery, you might get a good one, or a bad one. However, if you have things like Cards and Poison Bottles, rich kids will be grabbing these, but the sudden income of these things will ruin your economy badly. Imagine people on the first few days selling an Ifrit Card, these things also give an advantage to rich kids, over time, this does go away.

The third and most dangerous type of donation is the custom donation item. These are the things that sets servers apart. The stats or effects that these gives vary, but there's usually one thing in common with most of these types of items. They usually posses imbalanced stats in order for them to sell. Imagine, why would you pay for a Angeling Hat, when you have a Feather Beret that's free in the server. (Assuming both are refinable) Now, if you have something like say... an item that gives +50% resistance to demi-human, that item will sell like hotcakes in order for people to win in PvP/WoE. Along with these are the selling of items NEVER found in game UNLESS they have custom quests. They are completely unfair to non-donors. Donors should get an advantage, but at the end of the day, both will be equal.

This guide is the best I could do. This is useful for people choosing servers and the server creators themselves. Any questions will be gladly entertained.

[blackgh05t]

So yes, the economy is actually a major factor in having a good economy.

Thanks for the info.

[bleu]

I will try not to be too picky but perhaps you could try re-reading some of the stuffs said. Some things just don't seem right or a bit confusing. For example:

So yes, the economy is actually a major factor in having a good economy.

I believe you either meant to say:

"So yes, the economy is actually a major factor in having a good server."; or
"So yes, the population is actually a major factor in having a good economy."


But I do get what you are trying to say mostly - I just need to try to think a bit what you might actually mean.


Adding on to your Guide:

Non-People Factor
Some servers introduce additional NPC items (stems, poison spores, witch star sands, red gems, yellow gems, blue potions, grape juice, alcohol, EDP poison bottle,  etc... ) which also form part of the supply and do affect the economy. On the other side of the equation, almost everything on RO has an NPC price associated with it (which may or may not be a fair price) and could contributes to the demand. So, those who buys and sells items may not necessary be "People".


Corruptions
Having an older server with a larger populations do comes with their own problems pertaining to economy. I have seen and heard of many servers which have many corruptions- GM spawning items for their Guilds members, friends or themselves or just dropping them in the streets of Prontera, bug abuse, duplication of accounts, zeny, items, characters etc.... all actions which negatively affects the economy. While they may not be facing similar problems as a newly startup server, they could face the situation where their economy is flooded with too many items and zeny (mostly of questionable nature). You may also have heard of some of the more common solutions such as server wipes or zeny sinking.


Ageing Players
Having an older server with a larger population do not necessary guarantee people actually hunting items. Many veterans I know just log on RO for two hours each week for WOE only. And you see them next WOE. They are pretty self-sufficient. They have already amassed millions/billions of zeny throughout their years playing and have already the attained multiple sets of Godly gears and rare items. There's nothing worth buying. (No Demand) And they don't need to sell anything to make more zeny either (No Supply). Well - they don't really demand and supply much; that's what I am trying to say. They may buy some healing items or other WOE supplies. And for all we know, these items could might as well be just NPC items; which bypass the "People" entirely.


Information Asymmetry
Lack of information for players to decide and agree on a fair price of an item. Creating a mismatch in pricing. Buyers wants a lower price. Sellers wants a higher price. How do you tell how much is an item? Do you have past historical records of trading prices? In the most extreme situation, new players (or ill-informed players) will be ripped off.

Buyer: Hey, you must be new here?
Seller: Yes I am. My first week. I got this item - it's an Alice card. What shall I do with it?
Buyer: Oh, it's useless. It's just for collections. As a matter of fact, I am missing that one piece to complete my collections. If you look carefully, the NPC price for that card is only 10z. But since you are new, I am willing to pay you 10 times that amount = 100z. How does that sounds?
Seller: Cool. Thanks. Here you go, take this Alice card.


Concentration of Wealth
Over time, players leave the server, some may give their stuffs away to their closest friends/guildies . Imagine a server with a peak population of 3,000; now only with less than 50 active veteran players. Imagine the concentration of wealth in those 50 players. And how they could influence the economy.


Cliques
Overtime, players will cement strong bonds among themselves - some friendship other more than just friends (partners/family/etc..) So, you need 6    Megingjards for WOE/Leveling with your friends? Sure, I will lend them to you. Just keep them until u are finished with them- no rush. I think I have 10 more in the 30+ accounts I now own. That's what good friends/family do. Well the action of sharing is very noble, but the economic implications could be no demand for quest items needed to make Megingjards. If you want one, just borrow from a friend. Well, if you are new and don't belong to a clique - tough luck.

[tomosuke]

I will try not to be too picky but perhaps you could try re-reading some of the stuffs said. Some things just don't seem right or a bit confusing. For example:

So yes, the economy is actually a major factor in having a good economy.

I believe you either meant to say:

"So yes, the economy is actually a major factor in having a good server."; or
"So yes, the population is actually a major factor in having a good economy."


But I do get what you are trying to say mostly - I just need to try to think a bit what you might actually mean.


Adding on to your Guide:

Non-People Factor
Some servers introduce additional NPC items (stems, poison spores, witch star sands, red gems, yellow gems, blue potions, grape juice, alcohol, EDP poison bottle,  etc... ) which also form part of the supply and do affect the economy. On the other side of the equation, almost everything on RO has an NPC price associated with it (which may or may not be a fair price) and could contributes to the demand. So, those who buys and sells items may not necessary be "People".


Corruptions
Having an older server with a larger populations do comes with their own problems pertaining to economy. I have seen and heard of many servers which have many corruptions- GM spawning items for their Guilds members, friends or themselves or just dropping them in the streets of Prontera, bug abuse, duplication of accounts, zeny, items, characters etc.... all actions which negatively affects the economy. While they may not be facing similar problems as a newly startup server, they could face the situation where their economy is flooded with too many items and zeny (mostly of questionable nature). You may also have heard of some of the more common solutions such as server wipes or zeny sinking.


Ageing Players
Having an older server with a larger population do not necessary guarantee people actually hunting items. Many veterans I know just log on RO for two hours each week for WOE only. And you see them next WOE. They are pretty self-sufficient. They have already amassed millions/billions of zeny throughout their years playing and have already the attained multiple sets of Godly gears and rare items. There's nothing worth buying. (No Demand) And they don't need to sell anything to make more zeny either (No Supply). Well - they don't really demand and supply much; that's what I am trying to say. They may buy some healing items or other WOE supplies. And for all we know, these items could might as well be just NPC items; which bypass the "People" entirely.


Information Asymmetry
Lack of information for players to decide and agree on a fair price of an item. Creating a mismatch in pricing. Buyers wants a lower price. Sellers wants a higher price. How do you tell how much is an item? Do you have past historical records of trading prices? In the most extreme situation, new players (or ill-informed players) will be ripped off.

Buyer: Hey, you must be new here?
Seller: Yes I am. My first week. I got this item - it's an Alice card. What shall I do with it?
Buyer: Oh, it's useless. It's just for collections. As a matter of fact, I am missing that one piece to complete my collections. If you look carefully, the NPC price for that card is only 10z. But since you are new, I am willing to pay you 10 times that amount = 100z. How does that sounds?
Seller: Cool. Thanks. Here you go, take this Alice card.


Concentration of Wealth
Over time, players leave the server, some may give their stuffs away to their closest friends/guildies . Imagine a server with a peak population of 3,000; now only with less than 50 active veteran players. Imagine the concentration of wealth in those 50 players. And how they could influence the economy.


Cliques
Overtime, players will cement strong bonds among themselves - some friendship other more than just friends (partners/family/etc..) So, you need 6    Megingjards for WOE/Leveling with your friends? Sure, I will lend them to you. Just keep them until u are finished with them- no rush. I think I have 10 more in the 30+ accounts I now own. That's what good friends/family do. Well the action of sharing is very noble, but the economic implications could be no demand for quest items needed to make Megingjards. If you want one, just borrow from a friend. Well, if you are new and don't belong to a clique - tough luck.

"So yes, the population is actually a major factor in having a good economy." <-- This. I also was trying to show implications of donations and server population in direct contrast with the economy. I really like your points though. I would've never thought of most of them, but I do agree with the concepts behind them, especially the first one.

Though the factor of Information Asymmetry was more of a problem in the early stages, but not as much now. Especially considering most people actually do know how to play RO to some extent, however there are still a minority who might not know things.

[LemonCrosswalk]

Summary:

• You need people to have an economy. higher pop proportional better economy.
• Donation servers are generaly heavily corruptible and many times makes a large, unequal separation of power.
• Donations hurts the economy more often than not.

[Anti-Static Foam Cleaner]

Any server with drop rates bigger than 1.5 is potentially ruined anyway.